12-17-2011, 01:04 AM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by [email protected]</i>
<br /><blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Information Consultant</i>
<br />Thanks Nabeel
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Agreed with Nabeel.
Dear Nabeel
What should we have to do in respect of change the method of depreciation as per IAS # 08 for more reliable and comparable financial reporting.
Assume that the management is planning to change the depreciation method from straight line to reducing balance. As per changes in policy; how much life of that asset should be taken for adjustment as the asset is fully depreciated.
Regards
UMAR.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Assalam u Alaikum..
Dear Umar,
I would like to quote para 61 of IAS 16 dealing with your query
The depreciation method applied to an asset shall be reviewed at least at each financial year-end and, if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method shall be changed to reflect the changed pattern. Such a change shall
be accounted for as a change in an accounting estimate in accordance with IAS 8.
So as stated, it would be a change in accounting estimate "not in accounting policy" to be applied prospectively )
As far as the life is concern, useful life is an other estimate. Management can make its best estimate by consulting an expert and shall revalue the asset to start depreciation it again over the new useful life. Now wt life should be taken is not a matter an accountant can handle, its an area of special expertise. Accountant can only put the value in accounting records as per the rules but the value shall be determined by the management by consulting some expert.
Regards
Nabeel Munawar
<br /><blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Information Consultant</i>
<br />Thanks Nabeel
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Agreed with Nabeel.
Dear Nabeel
What should we have to do in respect of change the method of depreciation as per IAS # 08 for more reliable and comparable financial reporting.
Assume that the management is planning to change the depreciation method from straight line to reducing balance. As per changes in policy; how much life of that asset should be taken for adjustment as the asset is fully depreciated.
Regards
UMAR.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Assalam u Alaikum..
Dear Umar,
I would like to quote para 61 of IAS 16 dealing with your query
The depreciation method applied to an asset shall be reviewed at least at each financial year-end and, if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method shall be changed to reflect the changed pattern. Such a change shall
be accounted for as a change in an accounting estimate in accordance with IAS 8.
So as stated, it would be a change in accounting estimate "not in accounting policy" to be applied prospectively )
As far as the life is concern, useful life is an other estimate. Management can make its best estimate by consulting an expert and shall revalue the asset to start depreciation it again over the new useful life. Now wt life should be taken is not a matter an accountant can handle, its an area of special expertise. Accountant can only put the value in accounting records as per the rules but the value shall be determined by the management by consulting some expert.
Regards
Nabeel Munawar
